Could freelancers solve employers’ recession worries?

A recession is looming. This is not just a stressor for individuals, but also companies.

According to research by Coupa, 93% of global finance leaders, including CFOs, are worried about their company’s financial performance in the event of a recession.

The survey of 600 finance leaders in the US, UK, Ireland, France, Germany and Canada are facing internal pressure from other stakeholders, particularly CEOs, IT and HR.

Interestingly, despite what headlines might suggest, CFOs see layoffs as a last resort (86%). 87% are also clear that layoffs may solve immediate problems, but they create long-term challenges.

Instead of job cuts, CFOs and finance teams are keen to work with the likes of IT and HR to drive business efficiencies (53%), increase digitation (53%) and retain employees (50%) to make the company profitable in a recession.

They are keen to lean on HR to shift to contingent, contract or freelance labor in 2023 to help drive growth in the event of a recession, according to Coupa’s research.

This could help them save money on recruiting full-time staff, as well as help them with hard-to-fill skills and talents gaps in areas like technology and digital.

The state of the freelancer economy

The good news is that there is a healthy pipeline of contingent workers ready to step up and support employers in times of need.

According to research by Remote, this pool of freelance talent is increasing in size. The study found that 28% of current employees in the US and the UK plan to do freelance work in the next five years – this rises to 40% for 25 to 34 year olds.

The reasons for the interest in more contract or freelance-based work is the flexibility around when you work (67%), the amount of hours you work (66%), and the type of work you do (as employees can have lots of different clients) (64%).

Respondents also noted that freelance work means removing themselves from a toxic work environment or an overbearing manager (61%).

While employees may be keen to go freelance, a recession may hamper their ability to actually take the leap. Even before going freelance and outside a recession, employees worry about finding enough work (66%), managing an irregular income (62%), clients no paying (59%), the additional costs of working for yourself (57%) and filing their taxes (57%).

Additional research by Sky Connect found a new concern for freelancers, their energy bills. 87% said they were worried about rising energy costs, and this had pushed nearly half to work in an alternative location (like a library, café or pub) to save money.

Ultimately, businesses who are planning to rely on contract or freelance workers to support them in a recession need to ensure they are providing some stability in this challenging working environment.

This could be access to financial benefits, fixed rates or fixed-term contracts (rather than short-term project-based opportunities).

If this article caught your interest, you can find more like about talent management here. Enjoy!